Mexico sees big potential near Tsimin oil find

Mon Aug 30, 2010 5:14pm EDT

* Tsimin, Xux fields may hold more than 1.5 bln bls oil

* Nearby prospects look promising

* Finds prompt Pemex to step up activity in region

By Robert Campbell

MEXICO CITY, Aug 30 (Reuters) - Mexico's state oil company Pemex is increasingly optimistic about the potential of what appears to be a new cluster of light crude oil fields around its Tsimin discovery, according to company executives.

The side-by-side Tsimin and Xux discoveries are believed to hold the equivalent of 1.5 billion barrels of proved, probable and possible oil reserves said Manuel Teran, a Pemex engineer working on the discoveries, at a petroleum engineering conference this weekend.

"We are also optimistic that nearby locations could be similarly productive," Teran said.

Pemex [PEMX.UL] plans to drill additional exploratory wells at the two finds to allow it to reclassify the oil discoveries as proven, Teran said.

If Pemex succeeds in its efforts to reclassify Tsimin and Xux, the two fields would account for more than 10 percent of Mexico's total proven oil reserves.

The crude from the two fields is also very high quality, in contrast to the lower-value heavy oil pumped from Mexico's big fields in the Gulf of Mexico.

Pemex has been working to improve its exploration efforts as the country's largest oil fields are either mature or in decline, threatening its long-term status as a major oil exporter.

The company has set itself the goal of replacing all of the oil and gas it produces every year with new discoveries by 2012. Currently Pemex only makes new finds each year equivalent to a little more than three quarters of its annual oil extraction.

PRESSURE OFF CHICONTEPEC

Tsimin, first found in 2008, is already being fast-tracked for development by the state monopoly. Pemex plans to tender for the construction of two production platforms at Tsimin later this year, according to documents published on its website.

Further drilling could show that nearby prospects, such as Kimbe, could hold up to 200 million barrels of oil equivalent, Teran said. Pemex is even optimistic that the geological trend may even extend to the shoreline, where it has other onshore operations.

The success at Tsimin has encouraged a strategic shift at Pemex, which is taking a second look at the shallow waters of the Gulf of Mexico after struggling to find oil in the deeper waters. [ID:nN23176167]

Further light oil finds in the shallow waters of the Gulf of Mexico could also relieve some of the pressure on the company to quickly raise oil output at its troubled Chicontepec project.

Chicontepec has gobbled up billions of dollars in investment in recent years but production remains below 50,000 barrels per day, prompting some critics, including the country's new National Hydrocarbons Commission, to condemn the development as a waste of money.

However Pemex Chief Executive Juan Jose Suarez defended the project on Monday in a speech to the conference, arguing the company was overcoming some of the technical difficulties at the challenging development.

"Today Chicontepec is not a project that loses money," he said.

(Editing by Lisa Shumaker)

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